Page 237 - DCOM203_DMGT204_QUANTITATIVE_TECHNIQUES_I

Quantitative Techniques – I

Notes 3. The selection of period of moving average is a difficult task and a great deal of care is
needed to determine it.
4. Like arithmetic mean, the moving averages are too much affected by extreme values.

5. The trend values obtained by moving averages may not follow any mathematical pattern
and thus, cannot be used for forecasting which perhaps is the main task of any time series
analysis.

Task Assuming a four-yearly cycle, find the trend values for the following data by the
method of moving average.
Year : 1997 1998 1999 2000 2001 2002 2003
Sales(in '000) : 74 100 97 87 90 115 126
Year : 2004 2005 2006 2007 2008 2009 2010
Sales(in '000) : 108 100 125 118 113 122 126

!
Caution Method of moving average should be used only if the trend is linear, When the
trend is not linear, we often use weighted rather than simple moving average.

Self Assessment

Fill in the blanks:
1. The successive intervals are usually ........................ time intervals.
2. ......................... can be 10 years, a year, a quarter, a month, a week, a day, an hour, etc.
3. The data on the population of India is a time series data where time interval between two
successive figures is ...................................
4. Figures of national income, agricultural and industrial production, etc., are available on
............................. basis.
5. A series of observations, on a variable, recorded after successive intervals of time is called
a ...............................
6. The time series data are .............................. data in which one of the variables is time.
7. Factors affecting the agricultural output may be ......................... from the factors affecting
industrial output.
8. ............................. is the general tendency of the data to increase or decrease or stagnate
over a long period of time.
9. Periodic Variations are also known as ..................................which repeat themselves after a
regular interval of time.
10. Any trade cycle has four phases which are respectively known as boom, recession,
.............................. and .............................. phases.
11. The time interval between two identical phases is known as the period of .........................

12. Normally, the period of cyclical variations lies between ..................... years.
13. ............................. or ............................... Variations variations do not reveal any regular pattern
of movements.

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